If your firm just achieved record quarterly revenue, you may be tempted to raise your fists in the air. The conversation would then shift to the crucial query, “What caused the quarter to be so successful?”
The solution might be obtained by optimizing sales performance with sales analytics platforms supported by sales analytics software using a narrow set of parameters. You would analyze these vital sales KPIs to draw conclusions that would guide moving forward.
Here are the 8 key metrics in sales analysis that help keep tabs on business in real-time, analyze past sales, and use the results to make strategic choices for your small company.
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Understanding Sales Analytics and Its Relevance
Analyzing your company’s sales data thoroughly might provide new insights and bring to light crucial patterns and dynamics that your company must deal with. For example, the capacity to advertise to and engage the most promising leads, nurture them into promising possibilities, and ultimately complete the deals is fundamental to success in sales. Among the topics likely to be discussed are:
- The best places to get leads.
- The time it takes for leads to become opportunities.
- The time it takes to close opportunities.
The Value of Analyzing Sales
The capacity to analyze sales data in-depth allows you to learn more about your company, your consumers, and the market as a whole. Decisions concerning product and service development, market positioning, sales tactics, and responses to competition pressures may all benefit from this analysis.
More than that, sales analysis offers several benefits to those working in sales, such as:
- The real-time monitoring of sales results and sales funnel development.
- Insights into sales potential, rates of conversion, and the quality of leads.
- Access to consumer data that supports marketing choices regarding target groups and purchasing habits.
- Implement sales and marketing strategies supported by hard facts.
Now, let’s talk about the key sales metrics you should track to grow your e-com store.
8 Key Sales Metrics (KPIs) for e-Commerce Businesses
Regardless of the sales analytics tools at your disposal, a core set of eight metrics may be used to get insight into your present sales situation and aid you in forecasting future sales.
Average Order Values
If you want to know how much money customers spend on average when they shop at your online business, you refer to this as the Average order value or AOV. This figure is calculated by dividing the period’s total sales by its total revenue. When making sales projections, you may assume that future buyers will spend the same pre-purchase average as your present buyers. The lifetime worth of a client may be calculated with the help of the average order value.
Customer Lifetime Values
Using a customer lifetime value statistic, you may estimate how much money a client will spend with your firm throughout their whole relationship with your e-commerce business. However, to forecast how much they will spend with you in future sales cycles, you must analyze how much they have already spent with you.
The product performance indicator dissects revenue into its parts. The headline figure on sales reports doesn’t always tell the whole story; therefore, this is helpful. For example, all of your company’s SKUs may contribute equally to revenue, or one significantly outperforms the others.
If you want to get the most out of your marketing budget, you need to know which goods are selling well.
The sales growth indicator tracks sales data over a long time frame. It does this by contrasting the sales performance of the past with that of the present. For example, introducing new items and broadening your consumer base are ways to boost revenue.
Your ability to liquidate stock at the current pace is known as the sell-through rate. To calculate your quarterly product sell-out rate, divide your total quarterly sales by your total quarterly purchases. For example, a sell-through rate of 85% may be achieved by adding 1,000 units of inventory and selling 850 of them.
A sell-through rate of 31.8% would be achieved if 1,000 items were brought to stock, but only 318 were eventually sold. But it may vary by sector; your aim should be a sell-through percentage of 80% or more.
Lead Conversion Rates
A lead is a potential customer who was referred to your online shop.
When a potential customer becomes a paying customer, we call it a “lead conversion.” Once a consumer is on your website or shopping in your online store, their experience may be reflected in your lead conversion rate.
In this way, you can find out whether you’re converting a sufficient number of leads, and if you’re not, you can focus on optimizing your conversion rate to boost your performance.
Sales Funnel ROI
The sales funnels represent several touchpoints with potential consumers that lead to closed deals for your business. After potential consumers learn about your company, they enter your sales funnel, which continues until they become paying customers. Analytics for the sales funnel goes beyond tracking client actions on a website.
To learn what types of advertising and social media content provide the most qualified leads to your sales funnel, you will need to analyze their performance. Analytics may also be used to find “leaks” in the sales funnel or points in the customer experience where the buyer never makes a purchase.
You may use a sales pipeline to track and analyze leads as they go through your company’s sales funnel. Lead generation, lead vetting, demonstration, quotation, closing negotiations, deal closing, and after-sales support are the seven steps that comprise a sales funnel.
The rate at which potential customers travel through your sales funnel and become actual customers is your pipeline velocity. Keep tabs on how your customers feel and use that data to inform your sales predictions and quotas.